Unaccounted Deposits May Attract A 50 Per Cent Tax And A Four-Year Lock In Period

Old Indian Rs 1,000 currency notes (INDRANIL MUKHERJEE/AFP/GettyImages)

Unexplained bank deposits made using banned currency notes till 30 December will attract a minimum 50 per cent tax, reported Mint. A four-year lock-in period will also be imposed on half of the remaining amount.

Not declaring the unaccounted cash voluntarily, on the other hand, could attract a tax as high as 90 per cent.

These measures will be part of amendments to the Income Tax Act the government plans to introduce in Parliament shortly. The cabinet approved the amendment yesterday (24 November) in a meeting.

As per the Mint report,

Cash deposits made using the scrapped Rs500 and Rs1,000 notes above a threshold that are declared to income tax authorities may attract Rs50% tax...

Half of the remaining deposits, which comes up to 25 per cent of the original deposit, will not be allowed to be withdrawn for four years.

Demonetisation was a very significant step in the government’s push towards uprooting black money and corruption. But its full impact will not be realised if the unaccounted wealth makes its way into the system through benami deposits. Imposing high taxes appears to be government’s way to counter that.

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